thesis aneeq rizvi

8/8/2019 Thesis Aneeq Rizvi

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Chapter 1:

Introduction

In todays world, it is very difficult for multinational

companies to succeed in the market. Thanks to

globalization, competition between multinational and local

companies has increased. Multinational companies are

changing their strategy in order to dominate the market.

Therefore, companies are emphasizing on marketing.

Marketing is the process whereby society, to supply its

consumption needs, evolves distributive systems composed of

participants, who, interacting under constraints -

technical (economic) and ethical (social) - create the

transactions or flows which resolve market separations and

result in exchange and consumption. It focuses customer

satisfaction in term of needs, wants and requirements.

The attention given to customer satisfaction, however, does

vary. While few businesses would state that they dont want

to know what the customer thinks, there are those who seem

to assume that the customer is satisfied with their

products or services and that any attempt to measure

satisfaction would be of little value. They may be correct

in some cases, but in others they most surely are not; the

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competitor who does measure customer satisfaction, and who

figures out how to meet the customers preferences more

effectively, will likely be in a position to take market

share. This customer focused philosophy is known as the

'marketing concept'. It is founded on the belief that

profitable sales and satisfactory returns on investment can

only be achieved by identifying, anticipating and

satisfying customer needs and desires. In the early 1960s,

Professor Neil Borden at Harvard Business School identified

a number of company performance actions that can influence

the consumers decision to purchase goods or services.

Marketing effectiveness is the quality of how marketers go

to market with the goal of optimizing their spending to

achieve good results for both the short-term and long-term.

The practice of marketing effectiveness is often criticized

because it allegedly only focuses on short term revenue

gains. When, in fact, by definition, it concentrates on

marketing actions that can be taken to improve both short

and long term results. Short term results improvements are

measured in terms of revenue gains. Long term improvements

are typically measured in terms of gains in brand equity in

the minds of a companys customers.

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Pakistan International Airline

Pakistan International Airlines, or PIA for short, can

trace its beginnings to the days when Pakistan was not an

independent state.In 1946 Muhammed Ali Jinnah realized the

need for an airline network for the forming country and

called upon the help of an industrialist Mirza Ahmad

Ispahani to develop a flag carrier for the

nation.Meanwhile, an airline called Orient Airways,

registered in Calcutta, was formed on October 23 1946. In

February 1947, the airline brought three DC-3 airplanes

from a company in Texas, and in May of that year the

airline was granted a license to fly.Services were started

in June from Kolkata to Sittwe and Yangon. This was the

first post-war airline flight by a South Asian registered

airline company.

Two months after this service began, Pakistan was formed.

Orient Airways began relief flights to the new nation and,

soon after, it moved its operations to Karachi, where it

began flights to Dhaka on June 7, 1954.The Government of

Pakistan, realizing the operation was failing economically,

proposed that Orient Airways merge into a new national

airline. On March 11 1955, Orient Airways merged with the

government's proposed airline, becoming Pakistan

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International Airlines Corporation.In March 1960; PIA

became the first Asian airline to use jet aircraft when

Boeing 707 services were introduced.In 1964 PIA became the

first airline from a non-communist country to fly to the

People's Republic of China. As the Indo-Pakistani War of

1965 broke out, PIA helped the Pakistani forces with

logistics and transport.

1.1 Purpose of Research

The main purpose of this research is to highlight awareness

about the importance of internal environment, satisfaction

with employees and customer satisfaction on a companys

performance .This research empirically studies about how

these variables interlink and how internal environment,

satisfaction with employees and customer satisfaction can

help in the improvement of overall companys performance,

where the company is either oriented toward sales.

1.2 Scope of the Research

The proposed research is effect of internal environment,

satisfaction with employees and customer satisfaction on

companys performance. This includes some outstanding

features. This research will provide the reader to help

determine the factors due to which companies can improve

their financial performances by implementing the variables

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mentioned above. The conceptual model explains how company

performance improves.

1.3 Objectives of Research

The objective of this research is to measure how internal

environment, satisfaction with employees and customer

satisfaction can help in the improvement of companys

overall financial performances. The research explores how

the three variables are effecting on companys performance.

This effect will help determine the companys performance

before and after the changes due to these three variables.

1.4 Problem Statement

The main problem is that Pakistan international airline

adopts sales oriented concept but they do not focus on

internal environment, satisfaction with employees and

customer satisfaction due to this reason the sales of

Pakistan International Airline is constantly decreasing.

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Chapter#2

Literature Review

Srinivason, Lilien (1999) suggest that customer information

is an awareness positive feature which creates a

competitive advantagefor a firm. It has a positive impact

on performance of company .The customer information

management provides information about customers level of

satisfaction. In this paper authors study moderate

environmental effect of firm customer environment on

Customer Information Management, Customer Satisfaction and

firm performance. The study is based on collected data of

218 firms from national survey and also builds up different

scales used for study by multi-phase, iterative procedure.

After collecting data the regression analysis method was

adopted to test the relationship .The result shows that

there is a direct positive relationship between Customer

Information Management, customer information and firm

performance while indirect positive relationship with

customer satisfaction.

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Anderson and et al (1997) put forward that there was an

impact of customer satisfaction, productivity and

profitability on goods and services in terms of

satisfaction and profit. They collected data of customer

satisfaction from Swedish customer satisfaction Barometer

(SCSB) and financial data was collected from marketing

science institute. Using standardization and customization

model to test these relation. The result showed that:

1) Increase in customer satisfaction had positive impact on

productivity and profit for goods (industry).

2) Had high return on investment and customer satisfaction

but low productivity (services).

3) High productivity, low customer satisfaction and high

return (departmental store, new papers).

4) Supermarkets had high return with low productivity and

customer satisfaction.

5) Change in customer satisfaction and productivity

positive for goods while negative for services.

6) Both customer satisfaction and productivity positively

effect with return on investment for goods and services.

Edvardsson and et al (2000) propose that there is an effect

of satisfaction and loyalty on profits and growth between

products and services, because they depend on satisfaction

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and loyalty. In this paper the authors investigate which

variable is best for products and services in term of

profit and growth. They gathered data from 32 Swedish

industries and 130 companies. The satisfaction and loyalty

data was collected from Swedish customer satisfaction

index (SCSI) while financial data was taken from UC

(translated from Swedish as the information bureau).After

collecting data they used empirical study to find out

these relationship and also conceptual model that link

satisfaction, loyalty and performance. Results show that

satisfaction has positive effect on loyalty (service) while

loyalty has negative effect on firm performance on profit

and growth is greater for services than product.

Niraj and et al (2007) recommend that there is a need to

understand customer level profitability because it means

that how much companies earn profit through individual

customer. In this paper authors investigate the

relationships between individual customer level

satisfaction and profitability impact of customer

satisfaction and customer profit on profit. They gathered

data from Beverage supply Co. (BSC).The method regression

analysis is adopted for BSC. The result shows that there is

a Positive correlation between customer satisfaction and

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gross profit but it is changed through customer size and

customer current level of satisfaction.

Guo and et al (2001) recommend that there is an effect of

customer satisfaction on profit and profit impact on

customer satisfaction because past customer satisfaction

effect on profit while past profit effect current

satisfaction. In this study authors investigated marketing

metrics such as customer satisfaction, sale and financial

metrics such as profit and stock prices. They collected

data from American Customer Satisfaction Index (ACSI) and

other secondary resources .After collecting data, they used

event study method to test these relations. The result

shows that past satisfaction positively affect current

return on asset while current satisfaction negatively

affect return on asset.

Wiele and et al (2001) imply that there is an effect of

customer satisfaction on Business performance. In this

paper the authors investigate the effect of customer

satisfaction on organizational performance. He collected

data from Flex Company that operates in many other

countries. After collecting data they adopted longitudinal

study .The result shows that there is a positive

relationship between customer satisfaction and organization

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performance but due to some factors this relation is not

strong.

Hallowell (1996) evokes that there is a relationship of

customer satisfaction, customer loyalty, and profitability.

In this paper the author finds the relationship between

customer satisfaction, customer loyalty and profitability.

He collected data from 12000 retail bank at 59

divisions .After collecting data he used OLS regression of

cross sectional data to test the relationship. The result

shows that there is an effect of customer satisfaction and

customer loyalty on profit of bank.

Rhiansilvestro (2002) formulates that there is a

relationship between customer satisfaction, dissatisfaction

loyalty and financial performance because financial

performances of a company depend on these factors. These

factors whether positive or negative correlation with

financial performance of a company. He collected data from

Telecom Company, with four different businesses. One of

them was service consumer and other three business to

business. The method adopted in the study is longitudinal

analysis and measure relationship between customer

satisfactions, Loyalty, financial performance customer

stated intention .The result shows that customer

satisfaction positively propositional to revenue in one of

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the companies of B2B services and customer dissatisfaction

negatively effects on performances.

Anderson and et al (1994) narrate that there is a

relationship between customer satisfaction marketing share

and profitability because when company satisfy customer

then they want to expand business or increases market share

at that time profit goes up but the level of customer

satisfaction decreases. Therefore authors investigated

whether these variables were directly or inversely

proportional to each other. The study is based on data

collected from 77 firms of Sweden. National customer

satisfaction index and traditional accounting measures was

used to find return on investment (ROI), positive impact of

quality on customer satisfaction and profitability.

Empirical forecast and new analytical model are used to

show economic benefit of customer satisfaction. Results

show that there is a positive impact of quality on customer

satisfaction and positive effect of customer satisfaction

in the long run. There is a negative impact on customer

satisfaction when market share increases but in the long

run both are together.

Gupta and Zeithami (2003) describe that customer metrics

have impact on financial performance.The main objective of

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this study is to review and combine the current knowledge

about the impact of customer metrics on the financial

performance of the firms. They investigate unobserved and

observed metrics and also overview these metrics and

observe how they have been determined and represented in

research. They offer nine empirical generalizations which

have linkage that link between these metrics and their

impact on firm financial performance of the firm.

Kudu and et al (1997) advocate that there is a relationship

between advertising, profitability and business strategy in

Indiabecause these relationships show how much firms spend

on advertising and its impact on firms performance. In

this study authors investigate the relationship between

advertising spending by firm and its impact on firms

profit. They collected the data of 172 firms which included

sale, advertising expenses, and assets value of firm. After

collection of data , they used regression analysis method

to test these relations .The results show that increase in

advertise spend have no impact on firm value and increase

in adverting may not affect sale have. After doing further

research advertising show positive relation in four sectors

(banking and financial, telecom, pharmaceutical and

consumer durables)

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Antonis Klidas (2007) aims to test four potential

predictors of the behavior of empowered employees during

the delivery of service to customers. Methodology used in

research paper was questionnaire measuring employees'

perceptions of training, performance-related rewards,

customer-oriented culture, empowering management style, and

empowered behavior was filled out by 356 frontline

employees of 16 luxury hotels in seven European countries.

These statistical analyses removed common-method bias.

Results of regression analyses at the department level

showed that two means of control customer-oriented

culture and empowering management style correlated

significantly with empowered behavior and in the end

increase in companies Performance.

In the light of literature the above literature review, we

developed the following theoretical frame work.

2.1 Theoretical Framework

There are four variables

1) Internal Environment (IE)

2) Satisfaction with Employees (SE)

3) Customer Satisfaction (CS)

4) Companys Performance (CP)

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The company performance is dependent variable while

internal environment, satisfaction with employee and

customer satisfaction is independent variables. The company

performance is depending on these variables.

2.2 Model

CP= f (IE, SE, CS)

CP= + 1 . IE + 2 . SE + 3 . CS + Where CP: COMPANYS PERFORMANCE

IE: INTERNAL ENVIRONMENT

Companys

Performance

Independent variable Dependent Variable

Figure 2.1

InternalEnvironment

Satisfaction

with Employee

CustomerSatisfaction

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SE: SATISFACTION WITH EMPLOYEE

CS: CUSTOMER SATISFACTION

: ERROR TERM2.2.1 DEPENDENT VARIABLE:

The dependent variables are those that are observed to

change in response to the independent variables. In this

study dependent variable is Companys performance.

2.2.2 INDEPENDENT VARIABLES:

The independent variables are those that are deliberately

manipulated to invoke a change in the dependent variables.

It is a multivariate analysis as there are a number of

independent variables, which directly affect the dependent

variable i.e. companys performance. The independent

variables involved in this study are:

1. Internal Environment

2. Satisfied With Employee

3. Customer Satisfaction

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CHAPTER 3

DATA & METHODOLOGY

Methodology:

Tomasz Sobczyk and Tomasz Koch (2008)explains the

conceptual framework of so called costs, effects and

resources map that is intended to support performance

analyses of the production value stream. Its purpose is to

enhance manufacturing decision taking processes by

providing relevant information related to production flows.

The tool consists of five modules: production system model

(value stream map), cost module, financial statement and

inventory valuation module, resources analyses module, and

operational metrics module. The tool has been equipped with

appropriate metrics that enable analyses of production

system dynamics.

This was an analytical type of research to find out the

impact of internal environment, satisfaction with employees

and customer satisfaction on companys performance. Primary

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data has been taken to conduct the research. The collected

data was then analyzed by statistical measures i.e.

regression analysis and correlation.

3.1 Sample design:

The procedure of selecting the sample of respondents is

given below:

3.1.1 Population:

The subject/content of the study was to analyze the various

factors that affect the Companys performance. In order to

make research specific, I have focused on Pakistan

international airlines headquarter Islamabad. So my

population Pakistan international airlines headquarter

Islamabad.

3.1.2 Sample Size:

A sample of hundred consumers was chosen from Pakistan

International Airline Head quarter Islamabad.

3.2 Data Collection:

Basically in this report two types of data have been used.

Both of are listed below:

3.2.1 Primary Data:

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Primary data is the one which is collected from the scratch

meaning that the data is collected from the source and it

has not changed hands. In this report primary data has been

collected directly from the respondents. The data has been

collected from the respondents came in PIA headquarter with

the help of a survey. Questionnaires, consisting of 20

questions, were developed to quantify my observations and

give study a direction. The questions were structured,

placed in a sequence, to understand the consumers

perception. The respondents were chosen randomly and the

data obtained from their questionnaires was analyzed to

come up with the findings.

Below the table shows the preference indicators assigned to

the numbers on Likerts Scaling.5-point likerts scale has

been used in all the Questions being 5 as strongly agree

and 1 as strongly disagree.

Numbers Assigned Indicators

1 Strongly Agree

2 Agree

3 Neutral

4 Disagree

5 Strongly Disagree

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3.2.2 Secondary Data:

Secondary data is the one, which is collected from the

secondary source. This research study also contains

secondary data. The secondary data was collected for the

purpose of literature review. The secondary data was

collected from different research journals and further more

different websites were used for this purpose.

3.3 Procedure:

This was an analytical type of research to find out the

impact of internal environment, satisfaction with employees

and customer satisfaction on companys performance. Primary

data has been taken to conduct the research. The collected

data was then analyzed by statistical measures i.e.

regression analysis and correlation.

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3.4 Hypotheses:

Internal Environment

H0: Internal Environment does not affect Companys

performance.

H1: Internal Environment does affect Companys performance.

Satisfied With Employee

H0: Satisfaction with employee does not affect Companys

performance.

H1: Satisfaction with employee does affect Companys

performance.

Customer Satisfaction

H0: customer satisfaction does not affect Companys

performance.

H1: customer satisfaction does affect Companys

performance.

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CHAPTER 4

RESULTS AND DISCUSSION

4.1 Correlation:

Table 4.1: shows the correlation between

dependent and independent variables.

CP IE SE CS

CP Pearson Correlation 1 .633** .435** .816**

Sig. (2-tailed) .000 .000 .000

N 100 100 100 100

IE Pearson Correlation .633** 1 .594** .872**

Sig. (2-tailed) .000 .000 .000

N 100 100 100 100

SE Pearson Correlation .435** .594** 1 .542**

Sig. (2-tailed) .000 .000 .000

N 100 100 100 100CS Pearson Correlation .816** .872** .542** 1

Sig. (2-tailed) .000 .000 .000

N 100 100 100 100

**. Correlation is significant at the 0.01 level (2-tailed).

4.2 Interpretation:

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According to the correlation applied between independent

and dependent variables the results show a significant

correlation among the independent and dependent variables.

When the value of the independent variable is near or equal

to 1 there is a strong relation between the independent and

dependent variable and when the value of the independent

variable is near or equal to 0 there is a weak or null

relation between the independent and dependent variable.

4.2.1 Internal Environment:

The value of this variable according to the correlation

is .633 which is quiet fair and near to 1 which shows that

when the Internal Environment is improved, there is an

increase in the Companys performance. This means that

internal environment and companys performance are strongly

related to each other.

4.2.2 Satisfaction with Employee:


is .435 which is quiet near to 1 which shows that when the

Satisfaction with Employee is improved, there is an

increase in the Companys performance. This means that

satisfaction with employee and companys performance is

strongly related to each other.

4.2.3 Customer Satisfaction:

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is .816 which is quiet near to 1 which shows that when the

Customer Satisfaction is improved, there is an increase in

the Companys performance. This means that customer

satisfaction and companys performance are strongly related

to each other.

4.3 Regression Analysis

Table 4.2

Model R R Square

Adjusted R

Square

Std. Error of

the Estimate

1 .833a .693 .684 .25655

a. Predictors: (Constant), CS, SE, IE

If R2 is greater than .80 there is a good fit to the data,

where in our case R2 is .69 this means that there is a 69%

variation in the dependent variable (Companys Performance)

that can be explained by our independent variables.

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Table 4.3

Model

Unstandardized

Coefficients

Standardized

Coefficients

B Std. Error Beta t Sig.

1 (Constant) .856 .255 3.362 .001

IE -.198 .068 -.355 -2.928 .004

SE .068 .096 .050 .706 .482

CS .710 .075 1.098 9.474 .000

a. Dependent Variable: CP

The coefficient of the independent variables shows a

positive effect on the dependent variables (Companys

Performance) accept for the coefficient of one of the

independent variable i.e. IE, for which the value of the

coefficient is -.335. It has the negative effect on the

companys performance. Now by looking at the p-values for

each independent variable i.e. IE, SE and CS, if the value

of these independent variables is less than a(0.05), we

will accept the null hypothesis and can say that these

variables has an effect on the dependent variable. Whereas

the value of SE is greater than 0.05 we will reject the

null hypothesis and for the rest of the independent

variables, the p-value is less than 0.05 so we will accept

the null hypothesis.

4.3.1 Internal Environment:

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According to the table 4.3 the coefficient of this

independent variable is -.35 which means that IE has a

negative or null effect on the companys performance. The

p-value for the IE is .004 which lies under the rejection

region so we accept the null hypothesis and reject H1 with

95% level of confidence. This analysis proves that IE is

significant.

#0; is significant

4.3.2 Satisfaction with employee:


independent variable is 0.05 which means that SE has a

positive effect on the companys performance. The p-value

for the SE is .48 which lies under the acceptance region so

we reject the null hypothesis and accept H1 with 95% level

of confidence. This analysis proves that SE is

insignificant.

=0; is insignificant

4.3.3 Customer satisfaction:


independent variable is 1.09 which means that CS has a

positive effect on the companys performance. The p-value

for the CS is 0.00 which lies under the rejection region so

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we accept the null hypothesis and reject H1 with 95% level

of confidence. This analysis proves that CS is significant.

#0; is significant

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CHAPTER 5

CONCLUSION AND RECOMMENDATIONS

5.1 Conclusion:

After conducting this research study, it has been concluded

that, all the independent variables have a strong

relationship on dependent variable.

Now according to the current situation of companys

performance and sales we can easily see the decrease in

sales. The sales chart of year 2009 is given below:

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.

This chart shows that sales are constantly decreasing and

the factors involved in decreasing sales are the

independent variables.

Therefore with the improvement of the independent variables

an increase in overall companys performance

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Fig. 5.1


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5.2 Recommendations:

5.2.1 Information desk:

The Firstly We have to had an information desk on the

entrance .In the beginning we can give charge of this duty

to the security incharge as his duty is minimized after

cargo was being shifted .He will resolve two issues

immediately one token system and secondly guidance to

beginners & uneducated customers. The current security

arrangement which is currently inside the building should

be placed outside the entrance which will make our entrance

prominent and convenient for customers.

5.2.2 Agent desk and separate sitting area:

The second change we recommend is Agent desk and

separate sitting area for agents. As Cargo desks are empty

we can place one agent dealing international and one

domestic if load of agents dealing cannot be handled by

one. Minimize response time in agent dealing so they dont

stays in the building for long .This assure that agent

wont be able to divert customers towards them , cannot

make the lounge crowded ,engaged customer desk for long and

six agents can handle customer properly with minimum

response time if agents are handled separately. So for this

arrangement there will be no additional cost and it will be

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the first step to one window operations. The Agent desk is

being handled and supervised by corporate desk to have

check on agents.

5.2.3 One Window Operations:

Third change we recommend is One Window Operations as

we know we cannot change our system immediately to this so

we have to go through partial transformation of system.

Initially we can make one unit of a domestic agents and an

international agent. Both will deal domestic and

international customers simultaneously and complement each

other work like on job training .They will have daily

efficiency assessment by corporate desk managed by SPO and

their gratuity fund will be based on their productivity.

5.2.4 Corporate Desk Availability:

Then we recommend having a Corporate desk should be placed

which we can place at cargo manager office which is empty

due to shifting of cargo, who will look after the exclusive

clients ,supervise the agents desk and One window

operations .He will assess and evaluate the performance of

both desks on daily bases and compile appraisal of both

desk according to their output .He will also facilitate out

valued customer who are not satisfied with our PK agents

and provide them with their required travel plan so that

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they wont divert to other carriers. He will be the one who

make sure that the system we recommended will properly be

implemented and how effective it is for our office.

5.2.5 An effective use of display screens and

window glass:

Finally we recommend an effective use of display screens

and window glass for the purpose of generating addition

revenue without encoring any cost. As we have some brand

partners, hotels and travel service providers who are will

to market their product for our travelers, we can provide

them our window as a billboard and display screens for

which we can charge them .It will help us change our dull

same office theme frequently through commercial theme of

brands and help us earn revenue internally for the office.

This revenue can be utilized for the betterment of staff,

help giving OWO desks and agents desks appraisal internally

which will motivate not only them but also other employee

to shift to new system. The theme will also provide

physiological relaxation to employee and customer every

time they enter into the office. We can also use these

window and displays partially to promote PIA special offers

and travel destinations thought it. Many more can be done

thought this to earn revenues.

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All our recommendations are based on Zero cost and

without disturbing current system a lot, but we are sure

that the output will be more than 20% by these changes and

help build competitive customer service center according to

global market. Our recommendations are based on proper

placement and chain of command for check and balance.

thesis aneeq rizvi

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